The U.S.-Iran conflict is accelerating a global shift toward higher defense spending, stronger supply chain resilience and a less U.S.-centric world order, according to BMI, the research and data analytics unit of Fitch Solutions.
In a report, BMI said the war represents the fifth major shock to the global economy since 2020, following the Covid-19 pandemic, the Russia-Ukraine war, the Gaza conflict and U.S. President Donald Trump’s tariff campaign. Together, those events are pushing governments to strengthen economic security and reduce vulnerabilities to geopolitical disruptions.
“The conflict has brought about an acceleration of geopolitical trends that were already underway,” BMI said, adding that governments are increasingly pursuing more resilient defense and supply chain strategies.
BMI lowered the probability of its base case for “constructive negotiations” between Washington and Tehran leading to a nuclear agreement to 55% from 60%, while raising the likelihood of a more prolonged “messy negotiations” scenario to 45%, citing renewed military strikes despite a memorandum of understanding aimed at ending hostilities.
The report said the conflict is likely to deepen strains between the U.S. and its European allies, particularly after several NATO members declined earlier U.S. requests to contribute naval forces to secure shipping through the Strait of Hormuz.
According to BMI, those tensions could reinforce Europe’s push for greater strategic autonomy in defense, energy security and technology, while raising questions over Washington’s long-term commitment to NATO.
In Asia, the conflict has heightened concerns over energy security as economies remain heavily dependent on Middle Eastern oil. While governments are expected to diversify energy sources, BMI said Gulf producers would remain dominant because of their low production costs, export capacity and existing infrastructure.
The report also said U.S. allies in the Indo-Pacific are increasingly concerned that Washington’s focus on the Middle East could divert attention from the region, prompting countries such as Japan to deepen defense cooperation with regional partners and expand military exports.
BMI said China could benefit diplomatically from prolonged U.S. engagement in the Gulf by portraying itself as a more predictable global power while strengthening ties with Gulf states. However, Beijing also faces risks if instability weakens Iran’s government, potentially eroding years of Chinese investment and strategic influence.
For Russia, BMI said the geopolitical benefits are limited. While Western attention has shifted temporarily toward the Middle East, lower oil prices and continued battlefield challenges in Ukraine outweigh potential gains. Moscow also risks losing a key regional partner if Iran eventually improves relations with Washington.
Beyond the major powers, BMI expects so-called “middle powers” including India, Japan, Saudi Arabia, South Korea, the United Arab Emirates, Australia and European economies to deepen cooperation with one another as they seek to reduce dependence on both the U.S. and China.
The report also noted renewed concerns over global logistics after disruptions in the Strait of Hormuz exposed vulnerabilities in energy and trade routes. Although countries are likely to invest more heavily in pipelines, rail infrastructure and alternative ports, BMI said such projects cannot fully replace key maritime chokepoints.
“The scale and physics of global logistics mean that maritime chokepoints, especially the Strait of Hormuz, will remain structurally irreplaceable for both hydrocarbons and containerised trade for the foreseeable future,” the report said.
